Banco santander activity and results 2010

ACTIVITY AND RESULTS

20103 February 2011

2

Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the “SEC”), could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.

Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities or any advice or recommendation with respect to such securities.

The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation.

Nothing contained in this presentation is an offer of securities for sale into the United States or in any other jurisdiction. No offering of Securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom.

Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000. In making this presentation available, Santander makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity.

Note: Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, historical share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.

Important information

3

! Grupo Santander 2010 highlights

! 2010 Results

– Group

– Business areas

! 2011 Outlook

! Appendix

Agenda

42010 Highlights

Solid profit generation: EUR 8,181 mill. Diversification + Differential management by areas

1

Better structural liquidity positionDeposits + M/L term funding in 2010: +EUR 147 bill.

3

Increased solvencyCore capital: 8.80%; +33 b.p. in Q4’10

4

Group’s non-performing loans stabilisingNoteworthy improvement at SCF, Brazil and Sovereign

2

Shareholder remuneration maintained: !0.60/shareConsistent with increase in book value per share

5

Better Group positioningGreater diversification and growth potential

6

5

EUR million

Group’s quarterly attributable profit

EUR million

Group’s attributable profit

8,1818,943

2009 2010

1,635

2,2302,2152,2022,221

2,423

2,096 2,1012,107

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

EPS of EUR 0.9418 in 2010

1

In Q4’10 solid generation of RECURRING RESULTS is maintained, with a profit of EUR 2,101 million ...

Solid profit generation

-8.5%

Impact from the application of Bank of Spain’s Circular 3/2010: - EUR 472 million.

6

Mature marketsContinental Europe

5,0313,885

2009 2010

EUR million

-22.8%

Restructuring mature markets (UK+Sov.)

Constant EUR million

1,7572,409

2009 2010

+37.1%

Emerging marketsBrazil

Emerging markets Latam ex-Brazil

Constant US$ mill.; continued operations

Constant US$ million

2010 Attributable profit (1)

18%

15%

SAN Network+Banesto

SCF

9%7%

25%

UK

GlobalEurope

18%

4%

3,5884,464

2009 2010

In EUR

+24.4%

1

… backed by our diversification advantage which allows growthin a high percentage of the Group

SOV.

Portugal

4%

2,316 2,604

2009 2010(2)

+12.5%

(1) Over operating areas 2010 attributable profit(2) Excluding discontinued operations from Venezuela

Solid profit generation

7

Better performance of NPLs entries and risk premium in the Group and in the main units …

Base 100: 2009

13.0

18.213.5

2008 2009 2010

1.92.2

1.6

2008 2009 2010

EUR Billion Percentages

Percentages

SAN + Bto SCF UK Latam

94100

2009 2010

SAN + Bto SCF UK Latam

2

1.81.8

2009 2010

10087

2009 2010

42

100

2009 2010

81

100

2009 2010

Credit quality

2.73.6

2009 2010

0.41.1

2009 2010

3.64.8

2009 2010

Net NPLs entries(1). Main units Risk premium(2). Main units

Net NPLs entries(1). Group’s total Risk premium(2). Group’s total

(1) Excluding perimeter and exchange rate impact

(2) Risk premium: Change in the period's managed NPLs (change in the balance of NPLs plus write-offs less written-off assets recovered) over average lending risk

8

4.954.18

5.39

2.84

Dec'07 Dec'08 Dec'09 Dec'10

4.24

0.63

3.41

1.95


3.55

2.04

3.24

0.95


Total Grupo

Spain SCF

4.615.35


1.761.04

1.71

0.60


UK SOV

1.47

2.362.96 3.07


4.91

3.58

5.27

2.74


Brazil ex-Brazil

2 Credit quality

%

%

%

%

… reflecting an NPL RATIO stabilising at Group level and already lower in some units

Continental Europe

United Kingdom and USA Latin America

9

10199 98

Dec'09 Jun'10 Dec'10

110119 121


5873 64


In 2010 COVERAGE RATIOS remained stable or improved in general terms

Continental EuropeGroup

Spain SCF

United Kingdom and USA

UK SOV

Latam

Brazil ex-Brazil

7375 73


128

97111


4644 41


75

6267


2 Credit quality

%

%

%

%

10

91 92

Dec'09 Dec'10

42

30

38

72

147

109

Allocation Capturing

Liquidity

In 2010 high effort made in retail and wholesale capturing of funds …

2010 funds capturing and allocation.Total Grupo

EUR billion

MaturitiesM/L term

Loans increase

IssuesM/L term

Deposits increase

Note: In 2010, additional securitisations for EUR 19.2 bill. were placed in the market

3

Retail capturing strategy

Business (!bill.) Loans / Dep. (%)

Dec’10/Dec’09Deleverage

Matu

re

ma

rke

tsSelf financing

La

tam

Business (!bill.) Loans / Dep. (%)

Dec’10/Dec’09

+12

+79

Loans Deposits

147

125

Dec'09 Dec'10

+30 +30

Loans Deposits

11

7%

11%

76%85%

17%4%

Activo Pasivo

Liquidity

... which improved the Group’s funding structure and liquidity ratios

Group’s liquidity(1) balance sheet

Loans

Fixed assets

Deposits

Short term funding

Financial assets

Equity and other liabilities

M / L term funding

Permanent assetsPermanent liabilities

Structural liquidity buffer = EUR 127 bill. (+54 bill. over 2009)

Group’s liquidity ratios

Loans / Deposits (%)

Dep.+ M/L term funding / Loans (%)

150135

117

Dec'08 Dec'09 Dec'10

104106

114


High discount capacity available at central banks: around EUR 100 billion

3

(1) Balance sheet for the purposes of liquidity management: total balance sheet net of trading derivatives and interbank balances. Provisional data before the final closing.

12

25 2218

68

31 30

22

4

2011 2012 2013

24

14

2010

Liquidity

In 2011 we will continue to enjoy a comfortable liquidity position

No concentration on M / L term

issues maturities

EUR billion

! In the next three years, the maturities will be below 2010 issues1

Group issues Group maturities

Total

Other

euro zone

3

! Reduction of commercial gap in Spain and Portugal due to deleveraging

" EUR 9 - 11 bill. a year on a recurring basis in the current environment

! SCF: moving toward self financing

" Recourse to parent bank of EUR 15 bill. in 2009; 9 bill. in 2010 and self financing in 2012

Lower needs in the euro

zone

2

38

13

6.25%

7.58%

8.61% 8.47% 8.80%

Dec'07 Dec'08 Dec'09 Sep'10 Dec'10

Core capital performance

Note: Dec’07 under BIS I

Solvency

The Group has very solid capital ratios, appropriate

for our business model and risk profile …

… which put Santander in a

comfortable position to

meet BIS III requirements

Main impacts in Q4’10

! Organic capital generation +20 b.p.

! Scrip dividend +13 b.p.

+33 b.p.

4

14

7.237.58

8.588.04

2007 2008 2009 2010

Shareholder remuneration5

EUR per share

… increase book value(1) per share ...

Recurring profit and capital strength allowed Santander …

… to maintain total shareholder remuneration vs. 2009 (!0.60 /share) …

… and offer a total shareholder return (TSR) above market in the medium and long term

0.135 0.120 0.123 0.117

0.229

0.1190.135

0.222

1st 09 2nd 09* 3rd 09 4th 09 1st 10 2nd 10* 3rd 10* 4th 10

EUR per share

0.600.60

-2.2

+12.7

+5.0

+12.1

1 year 3 years 5 years 15 years

CAGR

difference (2)

in p.p. with

Euro Stoxx

Banks

(*) Santander Dividendo Elección(1) Calculated as (capital + reserves + profit – own shares - dividends) / (shares + Valores Santander)(2) Developed based on Bloomberg data as of 31-12-2010

+19%

15

Emerging

markets:

43%

Recovering

mature

markets:

38%

1

Expected GDP growth(2) in the next

3 years: > 4%

Expected GDP growth(2) in the next 3 years:

2% - 3%

Better Group’s positioning towards countries with large growth potential

2010 attributable profit(1)

Spain Retail (SAN+Banesto): 15%

Other Europe: 10%

USA: 6%

Portugal: 4%

Germany: 4%

United Kingdom: 18%

Brazil: 25%

Mexico: 6%

Chile: 6%

Other LatAm: 6%

(2) Expected GDP growth as the average for 2011-2013Source: International Monetary Fund, World Economic Outlook Database, October 2010

(1) Over operating areas attributable profit

6

1

2

Adjusting

mature

markets:

19%

3

Expected GDP growth(2) in the next 3 years:

1% - 2%

16


! 2010 Results

– Group

– Business areas

! 2011 Outlook

! Appendix

Agenda

17

Net interest income 29,224 +2,926 +11.1

Fees 9,734 +654 +7.2

Trading gains and other* 3,091 -912 -22.8

Gross income 42,049 +2,668 +6.8

Operating expenses -18,196 -1,775 +10.8

Net operating income 23,853 +893 +3.9

Loan-loss provisions -9,565 -81 +0.9

Provision BoS regul. change -693 -693 --

Profit before tax 12,052 +288 +2.4

Consolidated profit 9,102 -356 -3.8

Attributable profit 8,181 -762 -8.5

Var. o/ 2009

EUR Mill. 2010 Amount %% excl. fx. and

perimeter**

Minority interests:

absorb 4 p.p.

Greater fiscal pressure:

absorbs 5 p.p.

+0.1

-2.4

-16.5

-2.2

+2.0

-5.2

-8.5

--

-6.6

-11.2

-14.8

Grupo Santander Results

(*) Including dividends, equity accounted income and other operating results(**) Perimeter: Sovereign (January ’09 equity accounted income), SCF units, BNP Argentina

branches and Venezuela disposal.

1A

B

C

18

8.07.7

2009 2010

Santander network

Banesto

SCF

Portugal

United Kingdom (in £)

Brazil (in real)

Mexico (in pesos)

Chile (in pesos)

Sovereign(1) (in US$)

Grupo

-8.1%

+7.8%

+2.5%

+3.7%

-0.6%

-1.4%

-0.4%

-0.8%

-0.1%

+2.0%

Main units costs

(excl. perimeter and exchange rate impact)

Var. (%) o/ 2009

B

7.56.9

2009 2010

14.915.4

2009 2010

18.017.0

2009 2010

Brazil

Net interest income + fee income and insurance activity

A

EUR million

Fees and insurance

Net interest income

Cont. Europe

EUR Billion Constant EUR Bill. Constant US$ Bill.

26,299 29,224

9,41910,112

35,71839,336

2009 2010

UK + Sov.(1) Latam ex-Brazil

+6%

+10%

-3%

Constant US$ Bill.

TOTAL


Solid basic revenues and costs under control in all geographic areas

+4%

(1) Like-for-like comparison in SOV: 2010 o/ Q4’09 + Q3’09 + Q2’09 + February-March 2009 at a quarterly rate

19

(1) Including country risk

1.3

2.1

2009 2010

4.95.5

2009 2010

1.31.6

2009 2010

3.1

3.5

4.2

2009 2010

Specific provisions

Use of generic provisions

EUR million

EUR million

Lower PROVISIONS at Group level on a like-for-like basis, as the increase in Spain was offset by other areas

-2,159 -2,086

2009 2010

EUR million

BrazilCont. Europe UK + Sov. (2) Latam ex-Brazil

-40%

-11%

-19%

+35%

Net loan-loss provisions (1)

11,649

12,34211,760

2009 2010

10,258

9,565

9,484

2009 2010

C


Provision due to BoS’ Circular 3/2010

EUR Billion Constant EUR Bill. Constant US$ Bill. Constant US$ Bill.

(2) Like-for-like comparison in SOV: 2010 o/ Q4’09 + Q3’09 + Q2’09 + February-March 2009 at a quarterly rate

20

6,027 6,181 6,727

3,275

6,682

11,77014,902

5,846

9,302

12,863

18,497

20,748


EUR million

The provisions built in 2010 strengthened, once again, the Group’s TOTAL ALLOWANCES

Spain: Generic provisions

! Spain: 768

! Other# Europe: 1,510

! America: 3,568

2,907

Dec’09 Q1’10

-567

768

Dec’10Q3’10

-462

Q2’10

-491

-619

Q4’10

Specific

Generic

Totalfunds


21


! 2010 Results

– Group

– Business areas

! 2011 Outlook

! Appendix

Agenda

22

EUROPE

23

419

914

456

811

1,243

957

1,376

1,299

650

3,361

2,769

1,6371,906

1,190

4,634

4,841

2,403

Other

Portugal

SantanderConsumerFinance

Banesto

SANnetwork -9%

-7%

+13%

-6%

-2%

Continental Europe main units. 2010 Results EUR mill. and % o/ 2009

-15%

-11%

+13%

-10%

-10%

-38%

Net operating income:9,794 mill.; -5.0%

Gross income:15,946 mill.; -1.7%

Attributable profit(1):3,885 mill.; -22.8%

GBM GBM

-43%

+29%

-14%

-15%

GBM

2.878

(1) Deducting the impact from the application of BoS Circular 3/2010, the area’s attributable profit decreased 13% (SAN network: -23%; Banesto: -28%; SCF: +32% and other: -11%

Networks impacted by environment, deposit capturing campaign and Bank of Spain provision. Very positive trend of Santander Consumer Finance

24

+11%

+16%

Loans Deposits-7%

+45%

Loans Deposits

+0%

+18%

Loans Deposits

-3%

+18%

Loans Deposits

Continental Europe main units. 2010 Activity

3.35% 3.18%

2009 2010

Santander Branch Network

Var. Dec’10 / Dec’09

Volumes Net int. income / ATAs

(1) Retail Banking

3.05% 2.91%

2009 2010

Banesto


Volumes Net int. income / ATAs(1)

4.74% 4.99%

2009 2010

Santander Consumer Finance



1.71%1.43%

2009 2010

Portugal



25

27

30

61

12

11

95

Loan portfolio in Spain

At 2010 year-end Spain accounted for less than 1/3 of the Group’s

loans ...

EUR 744 billion

236 bill.

… with reduced share from real estate financing

EUR Billion

236

Household mortgages

Other loans to individuals

Total

Volume % / total

5%

26%

40%

12%

100%

5%

12%

No real estate purposes

Companies without construc. and real estate

Public Sector

Real estate purposes

Construc. & real estate (*)

(*) Of which loans to real estate developers: EUR 12.0 billion

26

EUR Billion

! Companies without construc. & real estate

! Constr. &

# real estate

! Household mortgages

! Public Sector

! Other loans to individuals

Improved risk profile with very active management to reduce exposure to construction and real estate sectors

! TOTAL 254245 236

-3.5%-3.6%

Net foreclosedreal estate assets 4.3 4.5 5.2 +0.9

Loan portfolio in Spain. Evolution

Real estate purposes

No real estate purposes

+5 +70.1%

Var. 2008 / 2010Amount %

-4 -5.4%

-3 -9.6%

-3 -3.6%

-11 -27.5%

-18 -7.0%

-2 -15.5%

38 31 27

13 13

95 95

3331 30

6564

61

1012

11

98

7

2008 2009 2010

27

Non-performing loans ratio (%)

NPL ratio growing at slower pace, as over 80% of the portfolio showed greater stability in 2010

Coverage ratio at Dec. 2010 = 58%

Total portfolio Spain

Other portfolio

Household mortgages

Loan portfolio in Spain. Credit quality

1.5

2.5

2.22.02.4

3.0

8.7

3.3

13.3

3.4 4.2

1.9


Construction & real estate(1)

Real estate purposes: 17.0%

No real estate purposes: 4.4%

(1) NPL Ratio calculated over consolidated balances eliminated intragroup

28Loan portfolio in Spain. Loans to construction and real estate sectors for real estate purposes

47%

22%

13%1%7%

10%

Finished buildings12,709

Buildings under construction

2,548

Developed land3,678

Other land 252

Without mortgage guarantee:

6,124

Building land2,023

Total: EUR 27,334 mill.

NPLs 4,636 1,321 29

Substandard 4,932 569 12

Generic 768

Total 9,568 2,658 28

EUR million

Amount Amount %

Risk Coverage

Portfolio with high share of buildings and working capital financing …

... well collateralised with adequate coverage of NPLs and substandard

(*)

(*) Over 75% of the operations payments are up to date.

29

! All mortgages paid principal since the first

day. There are no “interest only” mortgages.

" Furthermore, early amortisation is a usual

practice: the average life of the loan is well

below that in contract.

! A very high percentage is to finance first

residence. Since the borrower has home

ownership, the expected loss is very low.

! The borrower responds with all assets, not

just the house.

! Most mortgages are at variable rate with

fixed spread over Euribor.

Medium-low risk portfolio with very limited expectations ofadditional worsening

Loan portfolio in Spain. Residential mortgages

Spain’s mortgages.Differential characteristics

Grupo Santander: High quality collateral

Grupo Santander: Concentrating on lower LTV tranches with higher credit quality

94%

First residence

6% Second residence and other

34%

51%

13%

2%

<50% 50%-80% 80%-100% >100%

NPL ratio: 1.20% 2.02% 5.30% 3.35%

30

Finished buildings 3,098 25% 2,339

Buildings under constr. 564 25% 425

Developed land 2,307 35% 1,506

Building land 1,308 40% 787

Other land 232 40% 138

Total 7,509 31% 5,195

Gross Netamount Coverage amount

10%

31% 31%

2008 2009 2010

Loan portfolio in Spain. Foreclosed real estate assets

Foreclosed real estate assets

EUR Billion

Coverage

Net

Coverage ratio

Total

Stock structure

EUR million

Losses on sales:

approx. 25%

Active management: slowdown of stock in 2010 and coverage was anticipated in 2009

Gross 2.5 2.1 -20%entries

Sales & rentals 0.8 1.1 +31%

Difference 1.7 1.0 -44%

2009 2010

4.3 4.5 5.2

0.52.0

2.34.8

6.57.5

2008 2009 2010

31

2.9

1.72.32.5

2.62.2

0.8 1.5 1.8

10.5

8.2

18.4

2008 2009 2010

Companies w/o construc. & real estate

Constr. & real estate

13 11

2 22

16 1617

0 0 0

1.21.31.4

13

2008 2009 2010

-2.3 -7%

Loan portfolio in Portugal

Portfolio structure 2010

2

1.2

11

17

0

EUR billion

31

% overVolume total

1%

55%

6%

35%

3%

100%Total

Portfolio

NPL ratio (%)

33-0.6%

EUR billion

33 31-6.5%

-3.9%

-0.2 -42%

Var. 2008 / 2010Amount %

+0,5 +3%

-2.5 -19%

+0,1 +2%

-9.6%

Total

-0.2 -13%

Construction & real estate

Total portfolio

Other portfolio

Mortgages to individuals

Coverage ratio at Dec. 2010 = 60%


Public Sector


Companies w/o construc. & real

estate



Constr. & real estate

Public Sector

32

+16%

+33%

Deposits Issues

Santander Consumer Finance 2010

Results

Net op. income / Loan-loss prov.

EUR million

+43.1%

+21.2%

Provisions

243 249 260 254 288 354 339

744 753 766710

363

786

890825

860

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Var.Q4'10 / Q4'09

Activity

Var. in euro (Dec'10 / Dec'09)

New lending

Var. in euro

Funding

Loans: +11%

Dec'10 / Dec'09Net op. income

Net op. income after LLPs

+6%

-4%

+8%

2009 /

2008

H1'10 /

H1'09

2010 /

2009

+10%

+1%

-2%

-12%

+110%

USA Nordic

countries

Italy Germany Spain

Basic revenues – provisions

EUR million

721667

570

485539 541 553

643

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

(*)

4.74

2.89 2.75

4.99

2009 2010

Net interest income

Provisions

1.85 2.24

Net int. income / Provisions (% o/ATAs)

(*) Excluding securitisations for EUR 6.3 billion placed in the market

33

UNITED KINGDOM

34

572 597 632 668 674 675 669 602

686745 735 709

768710

791 788

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

389438449

426372374372

419

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

£ Million

£ Million

United Kingdom 2010

Net operating income

Total

Global businesses

UK retail

Var. 2010 / 2009 in £ (%)

-0.1%

+3.7%

+10.7%

+15.0%

+6.3%

Attributableprofit

Net op.Income after

LLPs

Net op.Income

Expenses

Grossincome

Attributable profit: £ 1,701 mill. (EUR 1,985 million)

Profit continued to grow at double digits, for the sixth straight year

Attributable profit

35

144154

2009 2010

United Kingdom 2010

Activity

+17.7%

Results

Provisions

497 570 520 505 587 601 624

686745 735 709

594

791 768788710

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


£ Mill.

£ Bill.

166160

2009 2010

+3%

19 22

54

2624

2009 2010

+13%(2)

£ Mill.

1,0111,017

958

849

922 917 913

981

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

+7%

+5%

£ Bill. £ Bill.

Net interest income / Provisions (% /ATAs)

1.111.26 1.26

1.34 1.32 1.26 1.22

0.26 0.24 0.30 0.28 0.28 0.26 0.19 0.15

1.21

0.850.97 0.96 0.98

1.06 1.06 1.07 1.07

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Var.Q4'10 /

Q4'09

+0.1%

Net operating income after LLPs

Basic revenues – ProvisionsMortgages Deposits(1)Loans to companies

Difference

Provisions

Net interest income

Note.- Activity data in local criteria.(1) Including retail deposits, companies and structured products. Moreover, GBM balances and

other non-core deposits of 6,800 million as of December 2010.(2) Loans to SMEs growth: +26%

Core loansNon-core loans

Net op. income

36

BRAZIL

37

748 846 960 844 853 896 1,012 991

758860

977 9921,003 1,053

1,209 1,199

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

+10.4%

+16.6%

+3.3%

+3.7%

+3.5%

+6.3%

Attributable profit (*)

Net operating inc. afterLLPs


Expenses

Gross income

Net int. income + feeincome

Brazil 2010

Good quarterly trend in profits, loans and risk quality. 24% profit increase before impact from higher minority interests


2,059 2,0562,537 2,345 2,326 2,359

2,700 2,742

3,1302,997

2,457 2,500

3,0033,143

2,917 2,892

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4



Attributable profit

Var. 2010 / 2009 in constant US$ (%)

(*) Result from continued operations: +24.4%

Attributable profit: US$ 3,751 mill.(EUR 2,836 mill.)

Total

Global businesses

Retail

Net profit

Minority int.

Attributable profit

38

7.65

3.282.66

7.53

2009 2010

Brazil 2010

Basic revenues


+23.8%

+4.9%

Provisions

1,488 1,464 1,543 1,548 1,577 1,628

2,700 2,742

3,130 2,997

1,9171,926

2,917 3,0032,8923,143

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Net op. income

Constant US$ million Var.Q4'10/Q4'09

(1) Local currency

Results

4,6804,510

4,369

3,997

4,255 4,3184,435 4,442

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


Dec’10 / Dec’09

+3%

+16%

-5%Dec'09 /

Dec'08

Jun'10 /

Jun'09

Dec'10 /

Dec'09

Total Loans

Activity (1)

Savings: +6%

Dec’10 / Dec’09

Net int. income / Provisions (% o/ATAs)

+18%

+9%

+22%

+9%

Individual

customers

Consumer

f inance

Businesses

+ companies

Corporate +

GBM


+16%

-7%

+12%

Demand Time Mutual

funds

Net interest income

Provisions

4.37 4.87

39

LATAM ex-BRAZIL

40

3.79

1.470.89

3.88

2009 2010

16%

11%

2%

Demand Time Mutual

funds

1,406 1,4481,306 1,276

880 887995 928

774 823 828 867

1,2871,2671,228 1,203

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Latin America ex-Brazil 2010

Basic revenues - Provisions



(1) Local currency

Results


Dec’10 / Dec’09

+2%

+14%

-6%

Dec'09 /

Dec'08

Jun'10 /

Jun'09

Dec'10 /

Dec'09

Total Loans

Activity(1)

Savings: +11%

Dec’10 / Dec’09

Net int. income / Provisions (% /ATAs)

+11%

+2%

-16%

+19%+17%

+32%

M ortgages Consumer Cards

ex-M exico

Companies GBM Cards

M exico

1.7891.673

1.5551.4821.337

1.200

1.5181.726

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Provisions

Net interest income

Provisions

Net op. income


Faster pace of activity, spreads management and lower provisions needs, spurred sustained growth of net basic revenues

2.32 2.99

41Latin America ex-Brazil 2010 Constant US$ million

This performance fed through to attributable profit (US$2,604 million)

2010

Attributable profit

Change (%)2009

Mexico 902 736 +22.7

Chile 904 857 +5.4

Argentina 393 299 +31.4

Uruguay 89 80 +10.3

Puerto Rico 50 46 +7.6

Colombia 54 52 +4.2

Other 28 28 -0.4

SUBTOTAL 2,420 2,098 +15.3

Santander Private Banking 185 217 -15.1

TOTAL ex-Venezuela 2,604 2,316 +12.4

Venezuela -- 64 100.0


42

-5%

+15%

-11%

Dec'09 /

Dec'08

Jun'10 /

Jun'09

Dec'10 /

Dec'09

Latin America ex-Brazil. 2010 Activity(1)

(1) Local currency

Mexico

+18%

-2%

-16%

+35%

Individ. w /o

cards

Cards SMEs +

companies

Corporat.+

GBM

+20%+16%

+7%

Demand Time Mutual

funds

Var. Dec'10 / Dec'09

Chile

Dec’10 / Dec’09Total loans

Savings: +14%

4.05

2.04

1.16

4.04

2009 2010

2.01 2.89

+8%+14%

-6%

Dec'09 /

Dec'08

Jun'10 /

Jun'09

Dec'10 /

Dec'09

Total loans

+16% +17%

+7%

Individuals SMEs +

companies

Corporate +

GBM

Dec’10 / Dec’09

+17%

-2%-6%

Demand Time Mutual

funds

Savings: +2%

4.25

1.490.94

4.40

2009 2010

2.763.46


Net interest income

Provisions

Net interest income

Provisions


Var. Dec'10 / Dec'09

43

SOVEREIGN

44Sovereign 2010

Activity(1) Results


x5Provisions

61155 207 213

297

-55 -25

17

128

378

212 238274

385 382 401

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Net op. income

US$ million Var.Q4'10/Q4'09

Attributable profit

-25 -10 -4

4

178132 157

95

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

US$ million

Normalised profit thanks to performance of revenues, expenses and provisions

+13.5%

Dec’10 / Dec’09Total Loans

+17%

-6%

+0%

-32%

Multifamily +

residential

Commercial &

industrial

Other loans Run-off

loans

Deposits (Dec'10/ Dec'09)

-18%

+3%

Retail

demand

Other dep.

(CDs)

Net int. inc. / ATAs(2)

US$

+37.7%

-7%

-1%

-12%

Dec'09 /

Dec'08

Jun'10 /

Jun'09

Dec'10 /

Dec'09


2.39%

3.28%

2009 2010

(1) Lending data (without securitisations) and deposits under US GAAP

(2) Data on a like-for-like basis (2010 o/ Q4’09 + Q3’09 + Q2’09 + February-March ’09 at a quarterly rate)

45

CORPORATE ACTIVITIES

46Corporate Activities

Higher negative contribution because of funding cost and lower gains on financial transactions

Attributable profit(Difference 2010 vs. 2009)

EUR million

Main impacts:

! Net interest income -468

! Gains/losses on financial transactions -773

! Other items -54

Total impact on profit: -1,295

47


! 2010 Results

– Group

– Business areas

! 2011 Outlook

! Appendix

Agenda

482011 Outlook

! THREE different business environments

" Adjusting mature markets (Spain and Portugal)

" Recovering mature markets (US, other EU, UK…)

" Growing emerging markets (Brazil, other Latam…)

! Integrating recent acquisitions

" Execution in 2011/2012

! Maintaining liquidity and capital strength

2011 Management focus

In 2010 Santander has overcame the challenges of a highly complex environment which remains highly demanding in 2011

2010 achievements, starting point


1


3


4


2


5


6


1


3


4


2


5


6

49Santander in 2011. Management focus

Differential management by markets

Adjusting mature markets

! Weak volumes because of deleveraging + Maximum focus on spreads

! Strict cost control, adjusted to the new environment

! Lower specific provisions

Recovering mature markets

! Greater activity +spreads management

" UK and Sovereign: greater focus on companies and transactional business

" SCF: backed by diversification and better evolution in key markets

! Costs: reduction of ordinary expenses; investment in technology

! Lower provisions, mainly in Sovereign thanks to lower NPLs

Growing emerging markets

! Strong growth and market share gain

" Mainly in loans but also in deposit-liquidity capturing

! Spreads: managing expectations on interest rates in each country

! Costs: investment in distribution capacity but with efficiency improvement

! More provisions spurred by growth but with lower risk premium

50Santander in 2011. Management focus

In short, in the face of a challenging 2011 Santander has the strengthsto, once again, perform well

! Germany (SEB retail unit)

" Transaction closing in January 2011

! UK (RBS branches and business)

" “Carve out”, an extremely complex process from a legal, commercial and technical standpoint

" Integration expected for: Q1’12

! Bank BZ WBK in Poland

" Pending authorisation from Polish regulators (purchase, IPO…)

Integrating recent acquisitions

! Good starting point + high internal

generation

" Capital: high retained profits and scrip

dividend

" Liquidity: reduction of commercial gap in

deleveraging economies

! Large capacity of wholesale issuing

" Rating, diversification (issuers, $,

maturities …)

! Liquidity and RWA optimisation

Liquidity and capital strength

Germany and Poland will start contributing results throughout 2011

and the UK in 2012

Without restrictions to grow in a profitable way and meet regulatory

requirements

2 3

52


! 2010 Results

– Group

– Business areas

! 2011 Outlook

! Appendix

Agenda

53

Appendix

! Group balance sheet

! Secondary segments results

! Main units spreads, NPL and coverage ratios

! Construction and real estate sectors in Spain

54

Group balance sheet

55

Retail balance sheet, appropriate for the business nature, of low risk, liquid and well capitalised

107

3794

223

616

140

Liabilities

724

74

81

99

67

173

Assets

1,218

Balance sheet at December 2010

1,218

2

! Lending: 60% of balance sheet1

3

2

! Derivatives (with counterpart on the liabilities side): 7% of balance sheet

! Cash, Central Banks and credit institutions: 14%

! Other (goodwill, fixed assets, accruals): 8%

6

4 ! Available for sale portfolio (AFS): 6%

1

Main trends of the Group’s balance sheet

43

! Trading portfolio: 5%5

56

Loans to customers

Derivatives

Cash and credit institutions

Other*

AFS PortfolioTrading portfolio

Customer Deposits

Issues and subordinated liabilities

Shareholders’ equity & fixed liabilities

Credit institutions

Other

Derivatives

EUR billion

(*) Other assets: Goodwill EUR 25 bill., tangible and intangible assets 15 bill., other capital instruments at fair value 8 bill., accruals and other accounts 51 bill.

56

Secondary segments results

57

1,798 1,845 1,920 1,8542,192

1,866 1,8322,049

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Retail Banking

Stable profits underpinned by diversification, with larger provisions in the last quarters


4,801 5,130 5,384 5,261 5,4475,779 5,7725,571

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Attributable profit

EUR million

EUR million

+7.0%

+13.0%

+9.7%

+10.7%

+10.1%

Attributableprofit

Net op.Income

after LLPs

Net op.Income

Expenses

Grossincome

Retail Banking

Var. 2010 / 2009 in euro (%)

+0%

+1%

-1%

+2%

-2%

+4%

-1%

Excl. fx and perimeter

58

+17.7%

+6.2%

+2.6%

+1.6%

-1.8%Attributable

profit

Net op.

Income after

LLPs

Net op.

Income

Expenses

Gross

income

Global Wholesale Banking (GBM)

Solid revenues and profit generation which compared well with a record first half of 2009 in a favourable scenario of spreads and volatilities

EUR million

Attributable profit

EUR million


568679

822

679779

670606642

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

9971,165

1,003

7629721,013

929

1,113

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

+28%

+18%

Attributable profit: EUR 2,698 million

Var. 2010 / 2009 in euro (%)

59Global Wholesale Banking (GBM)

Recurring model focused on customers and with a low risk profile

Total

Trading

Customers1,154 1,265

1,1351,006

1,113 1,196

143195

176

110

150196

165

1,2371,169

282

1,3611,297

1,460

1,311

1,116

1,4511,387

1,309

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q42,201

2,522

1,3031,179

115166

942848

623793

5,1845,508

2009 2010

+6%TOTAL

-10%

+15%

-10%

+44%

Trading

Solid revenues generation …

… in our core markets …

… based on a diversified product portfolio

! By customer revenues

Gross income (!mill.)

! Spain, Brazil and the UK generate around 75% of customer revenues

Gross income (!mill.)

Customer revenues

Investment banking

Corporate banking*

Hedging of interest / exchange rates

Equities

(*) Includes Global Transaction Banking and Credit

60Asset Management and Insurance

High contribution to the Group via revenues and profits

! In 2010: EUR 3,966 mill. of gross income from

funds and insurance(+10% o/ 2009)

84104

81 81

21

18

5

96989987

1722

8

2121

105122

89 86

108120 120

113

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

101

117124

D'08 D'09 D'10

Mill. euros

831

373

330

347

382

193

34

Brazil

Spain

Germany

Other Europe

Other Latam

UK

Sovereign

+12%

-7%

-7%

+4%

+21%

-16%

+5%

Total: EUR 2,491 mill. ! 2009 (!ctes.) = +3%

+8.2+6.7

Total Group revenues (cross-selling) Asset Management

= 9% of Group’s revenues

! Volumes recovering with initial impact on revenues

Revenues / expensesManaged assets (!bill.)

Revenues + fees paid to retail

networks Expenses

Attributable profit to the Group

Insurance (PBT + fees)Attributable profit

! After deducting expenses and fees paid to the networks

Asset Mgmt.

Insurance

Potential from global management

+ incorporations

61

Main units spreads and NPL ratios

62Continental Europe. Main units spreads (%)

3.40 3.15 3.00 2.78 2.602.04 1.87 1.89

1.832.102.21 2.26 1.942.32 2.25 1.83

0.060.040.50

1.19 0.890.10

0.68 0.53

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

Loans Deposits Total

2.69 2.51 2.27 2.28

2.021.90 1.94 1.96 1.99

2.00 1.92 1.99

0.180.79 0.57

-0.35 -0.51 -0.520.31 0.29

1.47

2.20

1.651.41

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


4.39 4.54 4.67 4.77 4.80 4.85 4.88 4.86

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4

2.11

1.881.821.821.761.731.721.701.61

0.220.400.450.74 0.230.210.100.09

2.031.922.35 2.15 2.12 1.95 1.85

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


SAN Branch Network Banesto Retail Banking

Santander Consumer Lending Portugal Retail Banking

63Continental Europe. NPLs and coverage ratios

4.64% 4.95%5.13%5.23%5.12%5.39%5.14% 5.46%

128%122%111%108%97%90%89% 92%

Mar'09 Jun Sep Dec Mar'10 Jun Sep Dec

NPLs Coverage

Santander Consumer

2.27%2.13% 2.04%1.87% 2.32% 2.40% 2.43% 2.90%

65%65%71% 68% 64% 65% 69% 60%


NPLs Coverage

Portugal

Banco Santander*

73%

3.41%

54%61%61%66%69%78% 63%

4.24%3.79%3.65%3.61%2.59% 2.82%2.35%


NPLs Coverage

64%

2.97%

54%60%58%61%73%85% 70%

4.11%3.83%3.49%3.13%2.32% 2.62%1.96%


NPLs Coverage

Banesto

(*) Santander Branch Network NPL ratio was 5.52% and coverage 52% as of December 2010

64

2.042.22 2.25 2.31 2.31 2.31 2.34 2.37

1.821.67

2.192.082.01

1.44

1.13 1.90

0.490.580.180.260.30

0.780.910.41

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


United Kingdom. Spreads and NPL ratios(%)

1.71% 1.76%1.76%1.84%1.87%1.54% 1.65%1.25%

44% 46%42%41%40%45%56%

48%


NPLs Coverage

(*)

(*) UPLs coverage >100%

Spreads Retail Banking NPLs and coverage

65Exchange rates. Latin America 2010

Appreciation of Latin American currencies against the dollar and euro

2010 2009 Var.

2010 2009 Var.

AVERAGE RATESEUR / LOCAL CCY.

AVERAGE RATESUS$ / LOCAL CCY.

1.3228 1.3906 +5%

2.3262 2.7577 +19%

16.6997 18.7756 +12%

673.9214 775.2659 +15%

US DOLLAR

BRAZILIAN REAL

NEW MEXICAN PESO

CHILEAN PESO

1.7585 1.9831 +13%

12.6244 13.5018 +7%

509.4605 557.5039 +9%

BRAZILIAN REAL

NEW MEXICAN PESO

CHILEAN PESO

(*) Positive sign: currency appreciation; negative sign: currency depreciation

66Spreads main countries Latin America(%)

15.81 15.12 15.29 14.73 14.29

0.87 0.90

17.01 17.43 16.68 16.02 16.13 16.23 15.81 15.42

15.2615.94 16.39

0.871.07 1.04 1.08 1.130.94

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


2.09 2.07 2.03 2.05

14.19 13.35 12.49 12.28 12.08 11.42 11.23 10.98

10.0310.83 10.77 10.40 10.21 9.50 9.20 8.93

2.053.36 2.58 1.92

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


Retail Banking Mexico

7.92 7.81 7.48 7.38 7.49 7.33 7.03 6.69

4.524.765.035.265.615.895.905.24

2.172.272.301.87 2.121.922.02 2.25

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


Retail Banking Chile

Retail Banking Brazil

67Latin America. NPLs and coverage ratios

Mexico

Chile

5.27% 5.04%3.86%

4.75% 5.09% 5.01% 4.97% 4.91%

99% 100%92%107% 95% 98% 98% 101%


NPLs Coverage

Brazil

2.80%1.84% 1.84%2.20%1.77%1.86%

3.04%2.45%

264% 215%199%257%268%122%128%

221%


NPLs Coverage

3.20% 3.74%3.58%3.31%3.36%3.30% 3.38%3.05%

89% 89%94%97%99%94%95% 94%


NPLs Coverage

68

1.88 1.91 2.04 2.08

0.80 0.80 0.62 0.53

2.302.60 2.68 2.71 2.88 2.95

2.66 2.61

1.961.901.88 1.94

0.990.70

0.42

0.94

Q1'09 Q2 Q3 Q4 Q1'10 Q2 Q3 Q4


Sovereign. Spreads and NPL and coverage ratios(%)

Spreads

4.61%4.80%5.11%5.35% 5.14%4.34% 4.82%3.98%

75%72%67%62% 64%67%66% 68%


NPLs Coverage

NPLs and coverage

69

Construction and real estate sectors in Spain

70

EUR million

1) Loans registered by the Group's credit institutions(businesses in Spain) 27,334 13,296 1,890

1.1) of which: Doubtful assets 4,636 2,391 1,321

1.2) of which: Substandard assets 4,932 2,715 569

Pro-memoria:

- Total general allowances (total businesses) 768

- Written-off assets 589

Pro-memoria: Group's consolidated data

EUR million

Carrying

amount (3)

1) Total loans and advances to customers excludingpublic sector (businesses in Spain) 216,726

2) Total consolidated assets (total businesses) 1,217,501

(1) Clasification according to the purpose of the loan, not the debtor's CNAE (National Classification o f Economic Activities)

(2)

(3)

The current regulation (Circular 3 / 2010, amending 4 / 2004) applies a cut in the valuation o f guarantees for the purpose of calculating the allowances:

20% first resindency; 30% offices and rustic properties in operation; 40% other housing; 50% land and real estate development; over the minimum value

between the purchase price and the updated appraisal value. The difference between the gross amount and the value o f the guarantee adjusted by the

regulation, is reflected in this co lumn.

Amounts by which assets are recorded in the balance sheet after deducting, where applicable, the amounts built for its coverage.

Chart 1. Financing provided for construction and real estate development and the respective

allowance(1)

. Data pertaining to the consolidated Group (businesses in Spain)

Gross

amount

Excess over

value of

collateral (2)

Specific

allowance

71

EUR million

1. Without mortgage guarantee 6,124

2. With mortgage guarantee 21,210

2.1 Finished buildings 12,709

2.1.1 Residential 5,247

2.1.2 Other 7,462

2.2 Buildings under construction 2,548

2.2.1 Residential 1,991

2.2.2 Other 558

2.3 Land 5,953

2.3.1 Developed land 3,678

2.3.2 Other land* 2,275

TOTAL 27,334

Chart 2. Breakdown of the financing provided to construction and real estate development.

Transactions registered by credit institutions (businesses in Spain)

Loans: Gross

amount

(*) Includes EUR 2,023 million of building land

72

EUR million LTV < 50% LTV > 100%

Gross amount 20,583 31,519 8,299 986

of which: Doubtful 247 638 440 33

Chart 4. Breakdown of mortgage loans to households for house purchasing, according to the latest available

loan-to-value (LTV) ratio.


50% < LTV < 80% 80% < LTV < 100%

LTV range

EUR million

Loans for house purchasing 61,936 1,388

Without mortgage guarantee 549 30

With mortgage guarantee 61,387 1,358

Chart 3. Loans to households for house purchasing.


Gross amountof which:

Doubtful

73

EUR million

1. Real estate assets from loans to construction and real estate development 5,396 1,790 3,606

1.1 Finished buildings 1,093 268 825

1.1.1 Residential 714 175 539

1.1.2 Other 378 93 286

1.2 Buildings under construction 564 138 425

1.2.1 Residential 562 138 424

1.2.2 Other 1 0 1

1.3 Land 3,740 1,383 2,357

1.3.1 Developed land 2,235 775 1,459

1.3.2 Other land* 1,505 608 897

2. Real estate assets from mortgage loans to householdsfor house purchasing 1,506 369 1,137

3. Other foreclosed real estate assets 607 154 452

SUBTOTAL 7,509 2,313 5,195

4. Equity instruments, ownership interests in financing to non-consolidatedcompanies holding these assets 840 438 402

TOTAL 8,348 2,751 5,597

Chart 5. Foreclosed assets to the consolidated Group entities (businesses in Spain)

Gross

amount

Net

amount

of which:

Allowance

(*) Includes EUR 1,308 million gross (EUR 787 million net) of building land

Banco santander activity and results 2010

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Transcript of Banco santander activity and results 2010